CJ E&M plans merger with CJ O Shopping

CJ E&M, Korea’s biggest film distributor, will merge with CJ O Shopping, the country’s top home shopping network, the companies said Wednesday, combining the assets of two powerful media companies.

The merger was proposed at a board of directors meeting that day. If it earns approval from general shareholders in June, the merger could be finalized by August.

CJ O Shopping is CJ Group’s home shopping network and the industry’s No. 1 in sales.

CJ E&M owns the movie theater chain CGV as well as multiple cable channels including tvN and Mnet.

“The decision was based on a strategic point of view that the combination of CJ O Shopping and CJ E&M’s business abilities can mark the start of a global media commerce company,” the companies said in a joint statement, “and help them gain competence in the rapidly changing media industry.”

Combined, both affiliates aim to raise 4.4 trillion won ($4.1 billion) in sales this year and operating profit of 350 billion won. The goal is to achieve sales growth of 15.1 percent annually through 2021.

CJ O Shopping’s expertise lies in merchandising and product planning, while CJ E&M specializes in content creation for television and online channels. They also have accumulated consumer data - CJ O Shopping in commerce and CJ E&M on television, mobile and social media use.

CJ expects the merger to have a positive effect in the global market. Both companies hope to combine their networks and partnerships in different countries, with CJ O Shopping in Malaysia, the Philippines and Thailand, and CJ E&M in Thailand, Turkey and Vietnam.

A major backdrop for the merger is changing media consumption patterns. Young consumers are watching content online rather than on television, and they are more used to watching trendy, made-for-mobile videos instead of conventional TV ads.

To keep up, CJ O Shopping has reinforced its e-commerce business in recent years, and it now accounts for 30 percent of all sales.

Last year, the network also produced several web dramas to promote products on the home shopping channel as well as its own brand.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]